Employers Planning To Go The Gig Economy Way Should Think Again

Context: A recent ruling by the Supreme Court of the United Kingdom against Uber is likely to change job-market rules in the fast-growing ‘gig’ economy and attendant business models on which gig economy is based.

Background:

• Gig economy: refers to “economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector.”
• UK’s apex court ruled in favour of the drivers: Noted their position of subordination in relation to Uber as they have little scope to improve their economic position through professional skill.

Advantages of the gig economy:

• Aid in economic recovery: by utilizing rising frictional employment (out-of-job workers looking for employment between jobs) and thereby providing temporary employment.
  • India’s gig economy has a compound annual growth rate of 17% to reach $455 billion by 2023 (Assocham projection).
• Preferred by employers: due to -
  • Removes complexity involved in hiring, training, engaging and retaining full-time resource.
  • Cost reductions: in terms of real estate, training and skilling and thus hold the promise of converting the human resources engaged by the contracting firm into the latter’s assets.

• Workers’ delight: 
  • Offers flexibility: to decide what one wants to do (and more importantly, not do), when, for whom, and from where.
  • Provides opportunities: for taking up multiple jobs to boost income, avoiding the dreariness associated with full-time jobs, upskilling, and/or pursuing hobbies alongside.

Challenges of the gig economy:

• Under-investment in gig workforce by concerned organizations.
• Difficulty in maintaining a company culture among a group of geographically-dispersed temporary workers.

Way forward:

• For companies moving onto gig platforms: they need to carefully work out the legal aspects of transition towards a gig economy.
• Policymakers should address regulatory aspects: to ensure that the interests of both parties are balanced.